Eliot Thomas, Manager of Tax Advisors at Anderson Business Advisors, shares expert insights on minimizing capital gains tax on stocks and the distinctions between bonus depreciation and Section 179. He discusses the benefits of employing your children in real estate ventures and how to manage health expenses through HSAs. Eliot also addresses educational expense deductions and strategic business structures to maximize tax advantages. Get ready for a lively conversation packed with practical financial strategies!
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Combining Depreciation Methods
Use bonus depreciation and Section 179 depreciation together for maximum tax benefits.
Section 179 depreciation can't create a loss, while bonus depreciation can.
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Deducting Education and Equipment
Deduct education expenses through a C-Corp for new business lines, not for passive real estate investing.
Equipment expenses are deductible if reasonable and necessary for the business.
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Paying Children for Property Management
Pay your children reasonable wages for managing real estate properties.
Run payroll for children 18 and older, consider tax benefits for both parties.
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In this episode, host Toby Mathis, Esq., welcomes regular guest Eliot Thomas, Esq., Manager of Tax Advisors at Anderson Business Advisors, to discuss several questions about taxation and S-Corps. Other topics include paying your children to work on your real estate properties, paying medical deductibles with your HSA, and of course minimizing capital gains taxes on stocks you’ve purchased. Submit your tax question to taxtuesday@andersonadvisors.
Highlights/Topics:
Is there any differences between bonus depreciation and 179 depreciation and, if yes, what are the differences? - They are completely different, though easily confused, and you can use them together.
if I set up my LLC for real estate investing but I have not bought anything yet, can I ride off the courses I have enrolled in to educate myself and equipment? - if it is true investing, then probably you wouldn't be able to deduct. There isn't any place in the tax returns to deduct something like that.
Can I run a payroll payroll for my son, who was 18 years old, to manage my real estate properties? What is the maximum amount that I can pay him to support me in my business? - There isn't necessarily any limit. It's just that, whatever you have to be reasonable for the services that the child is providing.
Can you pay the high deductible health insurance premiums from the HSA? - you can pay ANY deductible out of an HSA.
I'm a Big Dog and I have lots of questions about forming my LLC for a fix and split business and how to effectively write off expenses for 2023. I haven't set up my LLC yet and I'm in the middle of rehabbing a house that we won't be able to put on the market until next year. Is it too late to set up the LLC and get those write offs for this year? Does it matter if I'm not making any money yet? Should my LLC be filed as an escort? But I would have to be earning income and paying myself something, right? Can you explain how it all works? - So lawsuits are all over a place when you're rehabbing. So get that set up. All your costs that you're incurring are inventory, which means we don't get it deduct anything until a year you sell it.
What are the benefits of taxing my beauty salon as an S-corp? -you can write off like the percentage of the use of the home under many different theories. You could be using net square footage, you could be using the room methodology, you could be using gross square, or whatever is your best interest.
Can you roll over money from a current 401k account into a solo 401k account to invest in real estate? Can you please explain the taxes I would be responsible for paying on any gains made on a real estate investment using money in a solo 401k? - typically you can’t move it if you’re still employed. There aren’t any taxes.
what is the tax way to invest in the stock market and protect capital gains to minimize them? - we like to set up a partnership, put the trading into the partnership, and that partnership will be composed of a portion that goes to the individual, maybe 80, 90%, the rest to a C corporation.
I own rental properties and manage them myself Currently. I don't need the income right now. That's a great situation to be in. What are some strategies to get that income into a retiring account such as a solo 401k, since it's not earned income? - if it's a rental, you're going to want to hit in your 1040, which means it's probably a partnership.
I am looking for tax treatment benefit of a DST Stands for Delaware statutory trust, not a deferred sales trust, delaware statutory trust. It would be done through a 1031 exchange, so I understand that part, but it sounds like not only would I get a new depreciation schedule, but I get more. Granted, I should get more just due to the new asset purchase price. Right, what are the flags for a DST investment? - What are red flags? I think the things we always talked about is - it's just not very liquid when you have that Delaware statutory trust.
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